THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

RANDI KAYE, CNN ANCHOR: It's 10:00 p.m. here on the East Coast.

If you are looking for tonight's breaking news, well, just look out the window. Just about anywhere east of the Mississippi, there is something to see, much of it seasonably nasty, the kind of stuff you expect this time of year, a big blizzard tying up travel, the rest, though, totally unexpected, dozens of tornadoes, out of season and out of the blue, in your face.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Oh, my God. We need to go. It is right there. Keep recording. We got to hurry up and get past this.

(END VIDEO CLIP)

KAYE: One view of the storm as it moved through the Mobile, Alabama, area. Now here's another.

Oh, my God, that is cool. Jesus, please keep your hands on whoever's over there. Look at them. That is like two tornadoes. It's two funnels on the ground. Oh, lord. Look at there. Wow. Oh, oh, my God, look at that. Look, there is another one. It is fixing to touch down. Baby, we're fixing to have to get in the bathroom. It's coming toward us.

(END VIDEO CLIP)

KAYE: You don't expect a tornado in December, but in the South like here in Little Rock, Arkansas, you also don't expect much snow, but they got it, nine inches, in fact, more than they have seen 86 years.

It's a lot more common farther north, but rarely so much at once. with blizzard conditions in the Midwest, a foot-and-a-half or more of snow forecast in the Northeast and airline delays up and down the map, it is enough to make you want to stay put and watch CNN. We have everything you need to know tonight from wherever everywhere it matters.

(WEATHER UPDATE) KAYE: Well, if you are watching tonight, there is a good chance that you are watching us at the airport waiting to board a flight that has been delayed or trying to reschedule after a flight cancellation.

As always, whenever such a big storm blows through, the entire airline system feels it.

Holly Firfer is at the nation's busiest hub, Hartsfield-Jackson in Atlanta.

Holly, cancellations are bad right now and the worst might not be over?

HOLLY FIRFER, CNN CORRESPONDENT: That's right, Randi.

About 1,400 flights have been canceled already, hundreds more delayed. And that number, as the storm increases, as the storms heads to New England, as Alexandra said, tonight into tomorrow, that number may get worse.

Delays at airports from Detroit to New York an hour, hour-and-a- half. In Philadelphia, two-and-a-half-hours, they're waiting. It's not just the passengers who are getting frustrated, some of the pilots as well. Take a listen to an American Airlines pilot. He had been sitting on the tarmac for five hours with a plane full of passengers. Listen to an announcement he made on board.

(BEGIN AUDIO CLIP)

UNIDENTIFIED MALE: It's beyond reproach. I have no words to tell you that -- that -- how sorry I am for all of this. This is way, way above our heads by people that obviously, in my humble opinion, don't have a clue what they're doing.

(END VIDEO CLIP)

FIRFER: And according to American Airlines, the problem, they say, was that they put safety first and that they were worried about deicing the plane. The storm came so fast and they were concerned about the safety of their pilots and passengers before they were concerned about takeoff time.

This is going to continue into tomorrow. We have already heard that 90 flights are being canceled tomorrow as well as the storm conditions. If you are planning on traveling, Randi, it is best to call your airlines ahead of time so you are not waiting too long in the airport to see if your flight is delayed or canceled.

KAYE: Holly, that's a look at the airports. What about the roads and for those planning to hit the road?

FIRFER: The roads are just as bad, if not worse. They are treacherous. In the Midwest, the roads are icy.

Look at this video we got earlier from Indianapolis. An 18- wheeler slid off of an icy road and had to be towed to safety. The Midwest not strangers to winter weather and winter storms. Indiana's -- the Indianapolis Pacers canceled an NBA game tonight with the Chicago Bulls because they were concerned about people on the roads.

It's too dangerous on the roads there. Greyhound even canceled most of their Midwest to their East Coast buses. So it is kind of a mess everywhere. They're telling people check if you are planning on going somewhere, because it most likely may be canceled, especially if it's a plane or a bus.

KAYE: Holly Firfer reporting from a very noisy airport, Holly, thank you very much.

As we have been showing you, whether by air or by road, there is nothing easy or simple about getting around tonight. They have already been hammered in parts of the Midwest and now the Northeast is bearing the brunt.

Ines Ferre is in Syracuse, New York, tonight, where there is snow on the ground and plenty more to come.

Ines, what are the conditions looking out there like right now?

INES FERRE, CNN CORRESPONDENT: Randi, it already started snowing here and the heavier snow is expected to last anywhere four or five hours. And Syracuse is expecting about a foot of snow. What you see behind me is actually accumulation of snow from some previous snowstorms. In the last four days, they have already gotten 13 inches of snow here.

KAYE: And a big concern is visibility certainly overnight as the storm gets heavier. What can you tell us about that?

FERRE: Right, visibility and also ice. That's one of the problem, snow falling on top of snow and potential ice in some areas. Even when we got out of our car, we almost slipped in one area.

But that is why the city has got plows all throughout the area that have been sprinkling salt even in anticipation of the snowstorm. Now, city officials say that Syracuse is actually used to this amount of snow. The challenge tonight is this amount of snow in such a short period of time and it's been almost two years since Syracuse has seen one foot of snow all in one shot, Randi.

KAYE: Ines, thank you very much for the update from Syracuse.

And a lot more happening tonight, including late news on avoiding the tax hikes and budget cuts that could sink the economy. President Obama is rushing back to Washington. The question is what kind of reception will he get from the lawmakers he has been negotiating with? Dana Bash has been doing some digging and joins us. So does David Gergen and the rest of our political insiders.

(COMMERCIAL BREAK)

KAYE: Some late-breaking political news to report. Hawaii's governor naming a successor to the late Senator Daniel Inouye. He is Lieutenant Governor Brian Schatz. Senator Daniel had recommended U.S. Rep Colleen Hanabusa as his replacement in a letter sharply before he died.

Meantime, with six days until we all go off the fiscal cliff, President is cutting his Hawaiian family vacation short, flying back to Washington tonight. Unconcern, though, what kind of deal-making possibilities he will find when he gets back.

House Republican leaders held a conference call today, but made no decision about when to call their members back, nor it is clear what kind of deal, if any, they will have to vote on.

A lot of moving pieces to this, a lot of digging tonight for CNN's Dana Bash.

I understand there were no decisions out of this call, but do we have any sense of what fellow Republicans are telling Speaker Boehner? How likely are we to see a vote on this in time to avoid going over the cliff?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: It really is up in the air, and that I'm told is in part the reason why House Republicans didn't make a decision yet about whether even to bring the House back or when to do it, because the ball really is in the Senate's courts, particularly with Senate Democrats.

That has changed big time since a couple of weeks ago. At this point what Senate Democrats are trying to figure out is whether or not they can find enough Republicans to cross party lines for what the president proposed right before he left for Hawaii, which is a scaled- back bill really just focusing on tax cuts and focusing on the thing that he campaigned on during the entire campaign, which is only keeping the tax cuts in place for those making under $250,000.

Is it a big ask to try to get, at least by our calculation, about 10 Senate Democrats -- Senate Republicans, rather, to cross over. But they think that with the deadline that they're up against, it's just going to be hard to go back home and say I let everybody's taxes go up.

KAYE: Yes.

So what more do we know then about what is in this scaled-back bill?

BASH: Well, it is still being crafted and that is part of the dance that's being done in these next few days, which is what exactly do Democrats have to put into this in order to lure those Republicans if anything? Is there anything they can do?

Because, fundamentally, for most Republicans voting for the president's plan which would raise taxes on the top 2 percent, which is something that most Republicans campaigned really fervently against, they're not going to go for. But perhaps Democrats think if they can add an extension of the estate tax cut, if they can put some other tax extenders in there, maybe they can lure some Republicans.

But that is really part of the negotiation that's going to go on behind the scenes between Democrats and maybe one by one Republican after Republican. What do you need in order to come to the table?

KAYE: Senate Democrats telling you they think the best chance of passing this bill is actually to wait until the very last minute. Why is that?

BASH: This is going to make voters and viewers so happy, I'm sure.

The reason is basically they know the reality. And the reality is -- and we have seen it time and time again -- Congress acts when they are up against a deadline and really not before. We are pretty close to that deadline, but it won't be until they are actually literally facing the cliff and teetering off the edge of the cliff that many Republicans will say, fine, uncle, I will go for this, even though I don't think it's the right thing.

But I got to tell you, still, for the most part, Democratic and Republican sources do think that the most likely scenario is going off the cliff. The reason is because -- again, this is not going to make voters or viewers happy -- is because politically it's going to be a lot easier for members of Congress to vote for a tax cut, which will be what they would be voting for if everybody's taxes go up, than right now what they are voting for is, for at least some people, a tax increase.

KAYE: Yes. Dana Bash, we will continue to watch it along with you. Thank you.

BASH: Thanks, Randi.

KAYE: More "Raw Politics" now with senior political analyst David Gergen, Democratic strategist Maria Cardona, and Alice Stewart, former Santorum and Bachmann 2012 spokeswoman.

Good to see all after you.

Maria, I will start with you tonight. You have been around Washington for quite a while and have watched these 11th-hour negotiations. It really seems as if Democrats will not budge from their insistence that taxes be raised on wealthier Americans. Does it seem more likely now that we're headed off the cliff?

MARIA CARDONA, DEMOCRATIC STRATEGIST: It actually does, Randi.

As you know, because we talk about this every weekend, I was optimistic that perhaps this holiday season and hope springing eternal that we could actually get there. But I think a couple of things are at work here. The first one is -- you said it. Democrats are not going to budge.

And I actually don't think that they should. If there was one thing that was incredibly clear about what President Obama and the Democrats campaigned on this past election cycle -- and, by the way, he won -- was exactly this fallback plan or the small piece of tax cuts being extended for 98 percent of American families and 97 percent of small businesses.

There is a bill in the Senate sitting there right now that the House could actually vote on. They don't need to wait for anything else to pass the Senate. The House could call a vote on it right now, and 98 percent of America's families could see protection of their tax cuts extended. So I think that that is a strong position for the Democrats. They won on this. The majority of the American people agree that the wealthy and the 2 percent of the wealthiest in this country can afford to pay a little bit more. Most wealthy people agree with that.

KAYE: Let me bring Alice in here.

Alice, you say you believe President Obama and Democratic congressional leaders prefer going over the cliff so they can raise taxes and cut defense spending and blame the GOP, but Republicans do have the option of locking in tax cuts for most Americans right now.

ALICE STEWART, FORMER BACHMANN CAMPAIGN SPOKESPERSON: Well, to further that note, sure, I think the president does want to do this because, as you said, he can increase taxes, continue cuts on the military, and point the finger at the Republicans.

But the truth of the matter is that we need to have serious spending cuts. This is not an issue that is going to be resolved with taxing it away. We need to address serious spending issues that we have in this country. And the truth is Boehner and House Republicans today pointed out the House has issued legislation that would extend the current -- the Bush era tax cuts and would also erase military cuts.

And it's in the Senate's hands and they need to act on it. But something else that came up late this afternoon that is critical and is a reminder in this entire scenario, Secretary Geithner issued a letter today reminding and warning this country that we are going to hit the debt ceiling on New Year's Eve.

This is just a stark reminder that we have out-of-control spending in this country and Congress needs to wake up and smell the coffee that the spending needs to be addressed first and foremost, not just raising taxes on Americans.

KAYE: So, David, hard to believe that we are still talking about this. Here we are with virtually no time left of a deal. Did you see it happening like this? Is Washington really so broken that they can't find a compromise?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: I must confess I have been a short-term pessimist, but a long-term optimist.

I think the country will get back on track eventually, but it will take a while. This is extraordinary in two days. Damage has already been done because of this craziness in Washington. Consumer sentiment is down. Business plans for investment are down. Business sentiment is down.

We're going to pay a price this next year regardless of whether or not we go off the cliff. How extraordinary is it? The Senate hasn't acted, hasn't been called back to act on a bill between Christmas and New Year's for 49 years.

It's the first time in 49 years the Senate has had to come back like this. I think the prospects, as both of the others are pointing out, I think the prospects are strong that we are going to go over the cliff. They are high because the differences are so big.

The Republicans are going to clearly get most of the blame if we go over the cliff on taxes, but the Republicans have an argument. Look, the president promised us for every $1 of tax increases he would put on the table $2.5 of spending decreases.

The dollars for tax increases are on the table. The dollars for spending decreases are not on the table. But the Republicans will pay the price.

KAYE: Yes. When you look at the Republicans, was it a mistake for the Republicans to get into this fight over taxes then? They could have had the more popular message about cutting deficit spending, right?

GERGEN: That's a really good question.

The truth is they would have been a lot better off taking the deal that John Boehner was negotiating with President Obama way back when. It was a better deal all the way around. They missed that moment.

But I think the real far is not who pays the price. I think Republicans have a point that they are going to pay the price. But the real people who are going to pay the price are Americans, middle class. This is crazy. It's nuts to be putting us through this.

(CROSSTALK)

KAYE: Maria, all of the focus though on tax cuts, but the revenue from increasing the taxes on the wealthy will barely make a dent in the deficit, to say nothing of the trillions in debt we're talking about. Is this all just some symbolic fight that the president is determined to win just off his reelection?

CARDONA: No, it's definitely not symbolic, Randi, because there will be money raised if the tax cuts for the top 2 percent actually are left to expire.

But let me just bring up a point. No Democrat and certainly not this president has said that there should be no spending cuts. On the contrary, this president has actually put on the table quite an extraordinary amount of spending cuts, to the chagrin of many Democrats, I might add.

Are they to the extent that the grand bargain was several months ago last year? No, of course not, because the president is in a much stronger political position right now. So, let's remember that this president has never walked away from the bargaining table. The speaker of the House has walked away twice now.

So David's right. Republicans will get the blame politically. Does that mean that we shouldn't continue to try? No, because ultimately Americans are the ones who are going to be hurt if especially those middle-class families. And, let's remember, there is a bill today in the Senate where the House could pass it tomorrow if they wanted to, to protect the majority of America's middle-class families.

KAYE: Right.

(CROSSTALK)

KAYE: But, Alice, even so, Alice, which is a worse political fate for Republicans, going over the cliff or voting to increase taxes on wealthy Americans and some small businesses? If we go over the cliff, Republicans didn't vote for a rate increase and then they can come back and cut taxes in the new year, look pretty good, right?

STEWART: Well, I think the point is, it's not what looks worse for Republicans or Democrats. As David said, it's what looks worse and is worse for the American people.

KAYE: But doesn't that seem to be what they are worried about?

STEWART: What the Republicans are concerned with most is this out-of-control spending.

And to your point about tax increases not addressing the problem as a whole, what we are looking at now with this fiscal crisis it is like a mortal wound to our chest. We have blood gushing out of our chest and President Obama and the Democrats come along and put a Band- Aid on our forehead. And we continue to have problems coming out of a different area.

They're not addressing the real problem. We need to attack the spending. And we need to not just raise taxes, because even if we, for argument's sake, give the president every tax increase he wants, we are still looking at a trillion-dollar debt every single year. We need to address the spending in this country.

CARDONA: And the president has addressed that. That is why I made that point. No one is saying that there should be no spending cuts. He has done that.

(CROSSTALK)

KAYE: Yes, David?

GERGEN: Ultimately, listen, guys, we have got to find a bridge here to get across.

CARDONA: Absolutely. GERGEN: We have got to find what are ways that we can all agree on that will help us through that?

I would worry a lot if we spent the next three or four days of a time of semi-crisis for the country getting back down into our foxholes and shooting across at each other. We have got to come out of our foxholes and sort of, see, OK, guys.

This is really about the country. You know, our international reputation is going to suffer yet once again if our politicians can't do this. Every other country in the world is watching this and saying, is America prepared to lead? If we can't solve this, the conclusion has to be you can't trust these guys. They're not up to it.

KAYE: But if we do go over the cliff, David, and the nation does slide into a recession, as many forecasters predict, isn't it pretty easy to imagine the blame equally spread around Washington?

GERGEN: Sure.

I think the Republicans will pay the biggest price in the beginning. How it gets resolved over time, I'm not sure. The president so far has -- the fact is the Republicans have been losing the message war on this. Everybody knows that. The fact is that it's being painted as a party that is too extreme, too far to the right.

It's got to get back into -- I think for its own sake it needs to listen to more of the right of center and not the far right in figuring this out. The Republican Party can repair itself over time. But right now, it has to act as if, look, the country's needs come first. What do we need to do to protect the country's welfare?

If that spirit takes hold here -- we all thought it would come with the end of the elections. It didn't. Then maybe we thought it would come with the shootings in Connecticut. It hasn't yet come. Maybe the politicians can find it in themselves the next few days to say, hey, we're above this, we actually stand for something bigger than all this petty bickering.

KAYE: Yes. We will see.

(CROSSTALK)

STEWART: The voice of reason.

(CROSSTALK)

CARDONA: As a mother, this whole scenario makes it a lot tougher to really actually show your children how adults act, because I actually don't want to show them how Washington is acting, because it's exactly the opposite.

My daughter and my son are getting along much better at Christmas, imagine that, with sharing with all the toys than our leaders are in Washington. KAYE: Yes, it's how not to act.

CARDONA: Exactly.

KAYE: All right, Maria Cardona, Alice Stewart, David Gergen, nice to see you all. Thank you.

GERGEN: Thanks, Randi.

(CROSSTALK)

KAYE: Late developments as well tonight concerning the health of America's 41st president, George H.W. Bush. He's been in the hospital for weeks. Dr. Sanjay Gupta is here to explain what exactly is going on.

(COMMERCIAL BREAK)

KAYE: Former President George H.W. Bush spent Christmas in the entire care unit at Houston's Methodist Hospital.

He is 88 years old and has been in the hospital for more than a month now, initially for bronchitis. He has since developed a stubborn fever and has been in the ICU since Sunday.

Chief medical correspondent Dr. Sanjay Gupta joins me now by phone.

Sanjay, last week, it was expected that the former president would be going home for Christmas. Now we learn he is in the ICU. Generally speaking, what does that tell you and how dangerous is bronchitis and this subsequent fever for someone his age? What are the potential complications here?

DR. SANJAY GUPTA, CNN SENIOR MEDICAL CORRESPONDENT: Well, the age plays a big role here, as you might guess, Randi.

Typically, bronchitis is something that can be pretty easily treated, and oftentimes -- some of the times it needs antibiotics to treat it. But on someone like you and me it would probably be a pretty -- fairly easy thing to treat.

The fact that he's had bronchitis and then he was on the general care floor and went back to the intensive care unit with a fever probably, you know, indicates that the bronchitis was either not completely treated the first time around or it came back. It was treated but came back pretty quickly. And both of those things are -- you know, we take those very seriously.

As you might guess, Randi, the biggest concern: might this turn into pneumonia? Bronchitis being an infection of the airways, pneumonia being an infection of the lungs. That would be a more serious condition.

I will tell you one thing I read into that statement, Randi, I think is important. He's talking to his doctors. They say he's joking around with his doctors. Obviously, shows his spirit, but more importantly, shows that he's not needing assisted breathing or a breathing machine right now, and that is a good sign, Randi.

KAYE: Yes, that's certainly some good news.

As we said, he's been hospitalized now for more than a month. Now, to a lot of people that long a hospital stay sounds quite serious. A spokesman, though, says that he is in guarded condition in the intensive care unit. What exactly does that mean, Sanjay?

GUPTA: Well, guarded is one of these terms that is actually not a formal medical term. I mean, typically, when you think of medical terms, you think of someone being in serious condition, someone being in critical condition. This is somewhere in between. I think that's probably the best way to describe it.

I think -- you know, when I take care of patients in the intensive care unit, when we say they're guarded, that typically means we're keeping an eye on several different things. That could be the lungs. It could be someone's kidney function. It could be their neurological status. Again, we don't know what this means particularly with the former president. But it basically means, look, he needs to be in the intensive care unit because we need around the clock monitoring, someone to be monitoring him constantly and all of his vital signs. And there are things that we are trying to prevent from basically going in the wrong direction.

They haven't done that yet to become a critical situation, but we're worried enough there are several different things to keep an eye on, and the ICU is the best place for that to happen.

KAYE: And the former president's spokesman also said that he's on a liquid diet. Does that tell you anything in particular?

GUPTA: Well, you know, that's a very interesting thing. There's really a couple of reasons. First of all, someone simply cannot eat solid food. That would be the most obvious reason. They simply either don't have appetite or are having difficulty swallowing.

The former president himself has talked about the fact that he may have a form of Parkinson's. That's how he describes it. It's unclear what he meant by that. But people who have Parkinson's Disease often have difficulty swallowing.

The other thing is, as someone develops an infection in and around the airways, Randi, sometimes it becomes more difficult for them to basically protect their airway. When they eat something, they have a greater risk of aspirating it. Instead of going down their esophagus, it goes down their windpipe or their trachea. That's one of the reasons sometimes they'll be on a liquid diet, as well.

But the main important thing in the ICU is if someone -- a patient -- the former president needs to get the calories that he needs to heal. So however they can give it to him, solid or liquid, that's the most important thing.

KAYE: Sanjay, really appreciate it. Thank you very much.

GUPTA: You got it. Thanks, Randi.

KAYE: And let's check in on some other top stories. Susan Hendricks joins me with a "360 Bulletin."

SUSAN HENDRICKS, CNN CORRESPONDENT: Randi, former South African president Nelson Mandela is home from the hospital and will continue to receive treatment. The 94-year-old is being treated for a lung infection and had surgery to remove gallstones. He has not appeared in public since 2010.

Syria's chief of military police has reportedly defected to join the revolution. In a video posted on YouTube, which CNN cannot verify, he says Syria's army has deviated from its mission to protect the country while carrying out massacres against innocent civilians.

The two firefighters who survived a sniper ambush in Webster, New York, will be upgraded to satisfactory condition. They were shot Monday while responding to a house fire. The two firefighters who were killed will have funerals on Sunday and Monday.

And NBC's David Gregory may have violated D.C. gun laws. During Sunday's "Meet the Press," while interviewing an NRA executive, he held up a high-capacity magazine, as you see, which is illegal in the district. The Washington Metropolitan Police Department is investigating.

Randi, back to you.

KAYE: Susan, thanks very much.

Up next, big news if you drive a Toyota or have been watching 360's exclusive reporting on cars that owners say accelerated out of control. A billion-dollar settlement to tell you about and more when 360 continues.

(COMMERCIAL BREAK)

KAYE: Big news, a billion dollars' worth, in fact, in a story that 360 has been out in front of. Toyota today announcing a massive payout, $1.1 billion, to settle a class-action lawsuit by customers who say their Toyotas accelerated out of control.

In addition to the money, Toyota agreed to modify affected cars and take other action beyond that. All told, more than 60 million people may be covered by the record settlement, which follows a record $17 million fine Toyota paid federal regulators earlier this month.

360 has been on this from the beginning, uncovering details no one else has. Back in February, Drew Griffin broke the story of a documented link between the company's history of unintended acceleration and Toyota software. That report highlighted an internal Toyota engineering memo the company concedes it did not provide to government investigators.

And his story featured a Toyota customer who says she's convinced that her brand-new Lexus surged ahead on its own.

(BEGIN VIDEOTAPE)

DREW GRIFFIN, CNN CORRESPONDENT (voice-over): Tanya Spotts thought all of those problems with suddenly-accelerating Toyotas were old news, which is exactly why she bought the car of her dreams -- this 2011 Lexus ES-350 -- last June.

(on camera) Did you think it was solved?

TANYA SPOTTS (PH), CONSUMER: I thought it most definitely was solved. The federal government tested, you know, Toyota. They said it was floor mats or a sticky throttle or something like that, and I believed the government.

GRIFFIN (voice-over): Seven thousand miles later, on the day after Christmas, she says she was pulling into a parking spot at a local mall, gently riding the brake, she says, when -- well, take a listen. .

SPOTTS: The car just lurched forward and hit the cement wall in front of us.

GRIFFIN: She says she strained ligaments in her foot, causing massive swelling. And when she called her dealership, a salesman insisted she call a Toyota company lawyer.

(on camera) And you won't drive this again?

SPOTTS: I will not drive this car again.

(END VIDEOTAPE)

KAYE: Toyota has never conceded an electronics or software problem could in any way be responsible for sudden acceleration in its vehicles.

But Drew and producer David Fitzpatrick obtained an internal o engineering document written in Japanese and English translation that shows one instance during pre-production testing an electronic software problem was discovered. Toyota says this has nothing to do with unintended acceleration. Other safety experts disagree.

Today's agreement does not address the software angle.

And Drew Griffin is here tonight.

Drew, first, a big settlement earlier this month and now this.

GRIFFIN: From the beginning the company maintained it doesn't have a problem. Certainly nothing wrong with the electronic throttle control system. The company said it was three things. Stuck gas pedals, stuck floor mats and, quite frankly, operator error, as they said, was which they believe was Tonya's case. They believe that she just stepped on the gas instead of the brake.

So then what's the settlement all about, right? Why settle? Here's what Toyota's U.S. legal officer said in a statement today.

"This was a difficult decision, especially since reliable scientific evidence evaluations and evidence have confirmed the safety of Toyota's electronic throttle control systems. However, we concluded that turning the page on this legacy legal issue through the positive steps we are taking is in the best interests of the company, our employees, our dealers and" -- most of all, Randi -- "our customers."

The fact is, these court trials were beginning to creep up on Toyota. A lot of lawyers asking for a lot of documents and depositions. And this settlement keeps all those records out of the public, just like those -- the records that we found on AC 360 this fast February. So it's -- it's a way that Toyota says, "We're going to put this all behind us, and we're going to keep all of our secrets out of court."

KAYE: So Drew, who gets the money from this settlement?

GRIFFIN: It really is huge, Randi. The bulk of the money, according to Toyota, is going to go directly to the customers past and presence, and that will include a brake override system for all the vehicles that were identified by Toyota as having a problem with floor mats getting stuck.

For Toyota owners like Tanya, who actually sold their cars during the crisis when the sales and the values of owners' cars plummeted, Toyota set aside $250 million to compensate owners for the loss. There's going to be a separate $250 million to compensate owners who don't qualify for that brake override system.

And finally, all 16 million current Toyota owners are going to be eligible for this warranty of what Toyota says is certain parts related to sudden unintended acceleration. The warrants go from three to ten years. And I think clearly the intent here, Randi, is to turn the page just like Toyota said put the legacy legal issue behind the company. Sales are up. Sales are good. The company can afford it. They're hoping this really just puts all the sudden unintended acceleration in the past.

KAYE: All right. Drew, thanks very much.

Just ahead, remembering Emilie, Ana and Josephine. Her family called her Joey. Their funerals over the holiday weekend were the last ones in the Newtown tragedy. Difficult days are ahead for their families. And tonight, we remember the indelible mark these three first graders made.

(COMMERCIAL BREAK)

KAYE: No one could have predicted how life would change 12 days ago in Newtown, Connecticut. This has been a wrenching time, and many difficult days lie ahead. There are no adequate words to describe the murder of 20 first graders and six staffers at Sandy Hook Elementary School. Since the tragedy, the town's police officers have worked around the clock. There have been so many funerals, so many grieving families to assist.

Yesterday, though, they got a much-needed break. Officers from police departments across the state stepped in so that Newtown's first responders could have a day off.

The last of so many funerals were held over the weekend. Three little girls who had barely begun their lives. We remember them tonight.

(BEGIN VIDEOTAPE)

KAYE (voice-over): Ana Marquez-Greene is remembered by her family as a princess who loved math picture problems, arts and crafts, and ballet but, most of all, loved people fiercely. She was known for her singing voice bigger than her size.

KAYE: Just six years old, Ana grew up with music in her ears, and her love of singing was evident before she could even talk.

Her father is a musician and college music instructor. His 2009 album features a song he wrote about her entitled "Ana Grace."

Ana never walked anywhere. According to her family, her mode of transportation was dance. She leaves behind her parents and little brother Isaiah, also a student at Sandy Hook Elementary. He was unharmed.

On a Facebook page set up by her family, her mother writes, "I know this is your best Christmas yet, at home with our Lord and Savior. As your mom, I just wish we could have had a few more to celebrate here on earth."

MARQUEZ-GREENE (singing): Amen.

KAYE: Josephine Grace Gay turned 7 just three days before her life was tragically cut short. Known to her family as Joey, she was to have a birthday party the day after the shooting with many of her Sandy Hook classmates.

Mourners at her funeral were encouraged to wear purple, her favorite color, in her honor. Her parents say Joey rarely left the house without wearing something purple.

She loved to play with her Barbie dolls, iPad, swim, swing and to be anywhere her sisters were.

Josephine's parents said in a statement she was autistic and could not speak, "yet she touched the lives of so many around her. Teachers, therapists, friends, neighbors, all loved and cherished her." They called her spirit indomitable. Emilie Parker was a prolific and exceptional artist, says her father. When she saw someone was sad, she'd draw them a picture to brighten their day.

At just 6 years old, she was also a teacher.

ROBBIE PARKER, EMILIE'S FATHER: Emilie was a mentor to her two little sisters and delighted in teaching them how to read, dance, and find the simple joys in life. Emilie's laughter was infectious, and all those who had the pleasure to meet her would agree that this world is a better place because she has been in it.

KAYE: At her funeral mourners were encouraged to wear her favorite color: pink.

Emilie's family had moved to Newtown from Utah just eight months ago, because her father had gotten a job at the local hospital caring for newborns. Her funeral was held back in Utah.

JILL COTTLE GARRETT, EMILIE'S AUNT: Emilie -- Emilie was an example to not only her big sisters but to her family. To all her little friends. And now she's become an example to the world about purity, innocence, tragedy and forgiveness.

(END VIDEOTAPE)

KAYE: We remember tonight. We'll be right back.

(COMMERCIAL BREAK)

KAYE: We are just days away from the most unpredictable night of the year here on CNN. I'm talking, of course, about New Year's Eve, when Anderson and Kathy Griffin co-host our live coverage from Times Square. You never know who to expect, of course, when they team up.

Well, here's something you can count on. Just like last year, viewers will have the chance to see their own New Year's Eve messages on air. Just tweet using the hash tag #CNNNYE, or you can post on Facebook.com/AC360.

In the meantime, Anderson and Kathy are gearing up for their big night. And here's a preview.

(BEGIN VIDEOTAPE)

KATHY GRIFFIN, COMEDIAN: We are going to break it down this year.

ANDERSON COOPER, CNN ANCHOR: Yes?

GRIFFIN: And we're going to find out who you -- you know what? This year the mask is coming off.

COOPER: The what is?

GRIFFIN: The mask. COOPER: What mask?

GRIFFIN: The secrets that you have been keeping. And I don't mean the obvious one that even I'm bored with. I mean the darker secrets are coming out. This is the year where you are in a ball in my arms; you're in my Baby Bjorn sobbing, and that's my 10/20.

COOPER: I like that image of me in a Baby Bjorn sobbing.

GRIFFIN: Honey, I'm getting an Anderson Cooper Baby Bjorn, and you're going to be clutching me like those cloned monkeys, where they're just holding each other for safety.

COOPER: We tried to get the monkey from IKEA, because I'm obsessed with that monkey.

GRIFFIN: You're obsessed with a monkey from IKEA?

COOPER: You must have seen the monkey that got loose in IKEA in the shearling coat?

GRIFFIN: Yes. I'm sorry, but that is considered a big booking for this show, the monkey that got loose in IKEA?

(END VIDEOTAPE)

KAYE: That is just a taste of what you're going to get. There will be plenty more of that on Monday. This will be their sixth year together. CNN's New Year's Eve live with Anderson Cooper and Kathy Griffin starts at 10 p.m. Eastern from Times Square.

Being year's end, all this week we're counting down the top ten "RidicuList" stories of 2012. We asked you to vote online for your favorites. No. 10 and No. 9 are posted on our Web site, at AC360.com. And tonight, we are revealing No. 8 on the list, the exercise equipment that -- how shall I put it? Let's just say it leaves a lasting image.

(BEGIN VIDEOTAPE)

COOPER: Time now for "The RidicuList." And tonight we're adding whatever this thing is. It's a piece of exercise equipment from what appears to be a Korean infomercial, and let's just say that it follows very closely in the -- shall we say, suggestive footsteps of such devices as the Thigh Master and the Shake Weight. Let's take a look, shall we?

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: (SPEAKING FOREIGN LANGUAGE)

(END VIDEO CLIP)

COOPER: Hey, now. Wow. That's not just suggestive.

Now there is a language barrier, of course. But from what we can gather, this piece of exercise equipment finally addresses a very common problem, that problem being when you desperately want to ride a horse in your living room. But when you try to mimic the motion without any equipment you are likely to fall down.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: (SPEAKING FOREIGN LANGUAGE)

(END VIDEO CLIP)

COOPER: See? Problem solved. Finally, a way to pelvic thrust your way to fitness without the risk of falling on the floor, which always happens to me. And to think, all we have in this country is the Shake Weight, which looks downright demure by comparison.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It's going to kick your butt.

UNIDENTIFIED MALE: That is it.

UNIDENTIFIED FEMALE: You just shake it back and forth.

(END VIDEO CLIP)

COOPER: Actually, forget the whole demure by comparison thing. It still looks like a "Saturday Night Live" sketch.

(BEGIN VIDEO CLIP)

BILL HADER, CAST MEMBER, NBC'S "SATURDAY NIGHT LIVE": Introducing the Shake Weight commercial DVD. The DVD featuring the Shake Weight commercial three times on a loop, then some static, and then nothing else.

COOPER: I'm sorry, but all I can think of any more when I see the Shake Weight is that time I was playing a game on Andy Cohen's "Watch What Happens Live."

(BEGIN VIDEO CLIP)

ANDY COHEN, HOST, BRAVO'S "WATCH WHAT HAPPENS LIVE": Anderson Cooper, show me how to use this Shake Weight. Come on.

(END VIDEO CLIP)

COOPER: I think I lost the game, but I like to believe I won a small victory for dignity that day.

I suppose I should just be thankful he didn't try to get me to demonstrate the Korean horse riding machine on live television.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: (SPEAKING FOREIGN LANGUAGE)

(END VIDEO CLIP)

COOPER: The Olympics are going on. People -- people want to get in shape. We're just doing a public service here, letting you know you do not necessarily have to join a gym or buy a horse, as the case may be. You just have to get your hands on the finest piece of exercise equipment to ever be thrust onto the fitness scene and onto "The RidicuList."

(END VIDEOTAPE)

KAYE: You can see No. 7 tomorrow night. That does it for this edition of 360. Thanks for watching. "ERIN BURNETT OUTFRONT" starts now.